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Nine face Katrina aid fraud charges

From Terry Frieden
CNN

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Disaster Relief

WASHINGTON (CNN) -- Nine Californians have been charged with fraud for allegedly participating in a scheme to pocket Red Cross hurricane relief funds from a call center in Bakersfield, Justice Department officials announced Tuesday.

None were Red Cross employees.

"So far we've documented a loss of at least $25,000, but we expect that amount to go up," said U.S. Attorney McGregor Scott, of Sacramento, speaking in Washington.

Eight of those charged have been arrested over the past four days and are scheduled to appear Wednesday in federal court in Fresno. A ninth defendant is being sought. All are Bakersfield residents and range in age from 19 to 44, Scott said.

They face a maximum sentence of 20 years in prison and/or a $250,000 fine, if found guilty of the wire fraud charge.

Many more arrests are expected, law enforcement officials said. One source who asked not to be identified said the number could reach 20 or more.

The Red Cross established the call center in Bakersfield to enable evacuees and other hurricane victims to receive PIN numbers, which they could then use to receive funds through Western Union. Single individuals were eligible for $500 in relief aid and families were eligible for up to $1,500 through the Red Cross, authorities said.

After an audit found a disproportionate number of disbursements for hurricane evacuees going to the Bakersfield area, suspicious Red Cross employees called the FBI to investigate.

FBI officials said an initial investigation found four contract workers hired to work at the Red Cross call center provided confidential codes to at least five friends and associates, enabling them to obtain the Red Cross funds at a Western Union office.

"An FBI agent showed up at a Western Union office where one of these guys happened to be standing. When the agent identified himself as FBI the man started to flee, and the FBI agent literally tackled him," Scott said.

"It is beyond the pale that there are those who would seek to capitalize on the tragedy wrought by Hurricane Katrina and the generosity of so many who donated relief funds," said Scott, who was in Washington to meet with senior Justice Department officials.

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